Customs, Excise and Gold Tribunal - Hyderabad
Techno Cables Pvt. Ltd. vs Cce on 16 February, 2001
Equivalent citations: 2001(97)ECR101(TRI.-HYDERABAD), 2001(136)ELT721(NULL)
ORDER Lajja Ram, Member (T)
1. In this appeal filed by M/s. Techno Cables (P) Ltd., the matter relates to the duty liability on the plastic waste and scrap removed for job workers when such waste and scrap had arisen during the course of manufacture of plastic pipes and fittings from the duty paid modvated plastic granules. When the waste and scrap was removed to their job workers, no duty was paid. The Asst. Commissioner of Central Excise took a view that the plastic waste and scrap arising out of the processing of the modvat availed inputs were neither inputs as such nor were inputs which had been partially processed and thus, such removal was not covered by the provisions of Rule 57F(3) of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules'). He held that appropriate duty as applicable to waste and scrap of plastics was liable to be paid and he confirmed the demand of Rs. 45,400/-. Relying upon the Tribunal's decision in the case of Shriram Refrigeration Indus. v. CCE, Hyderabad , the Commissioner of Central Excise (Appeals) held that the waste and scrap in question could be removed only after payment of duty. He confirmed the view taken by the adjudicating authority.
2. The matter was heard on 23.1.2001 when Shri K.R. Natarajan, advocate, submitted that the appellants were engaged in the manufacture of telephone cables. Their duty paid raw material was plastic granules and sheets. They were availing of the benefit of modvat credit in respect of the duty paid on the plastic granules and sheets and utilising the same towards payment of duty on telephone cables. In the process of manufacture of telephone cables, the plastic scrap was generated which was sent to their job workers to convert the same into granules. No duty was paid at that stage. The granules brought back were re-used in the manufacture of cables which were then cleared on payment of duty. According to the Department, the duty should have been paid on plastic wastes and scrap before their removal to the job workers. According to the learned advocate, the matter was covered by the Tribunal's Larger Bench decision in the case of Wyeth Laboratories Ltd. v. CCE, Bombay .
2.1. In reply, Shri S. Kannan, DR, submitted that the plastic granules were the inputs, and the waste and scrap was not the inputs. They were also not partially processed intermediate products as they arose when the final products were manufactured. It was his submission that the Larger Bench decision related to the different products and was not applicable to the facts and circumstances of this case. The present case was distinguishable.
3. We have carefully considered the matter. The appellants were engaged in the manufacture of telephone cables (final products), and were using duty paid plastic granules (inputs) in the manufacture of such final products. They were availing of the benefit of modvat credit in respect of the central excise duty having been paid on their inputs. In the case of manufacture of final products, certain waste and scrap of plastics was generated. Modvat credit had already been availed of in respect of the inputs used in the manufacture of final products (out of which the waste and scrap arose) for discharging duty liability on the resultant final products. In such circumstances for duty liability on the waste and scrap (which were otherwise dutiable under Heading 39.15 of the Central Excise Tariff), reference may be made to the Tribunal's decisions in the case of Siemens Ltd. v. CCE, Calcutta and Bajaj Tempo Ltd. v. CCE, Pune 1995 (10) RLT 107 (T).
4. In the present case the inputs were the granules. The waste and scrap could not be considered as inputs or partially processed inputs. The inputs had already been converted into finished products when the waste and scrap arose. As the waste and scrap were neither inputs nor partially processed inputs, they could not be removed without payment of duty under the provisions of Rule 57-F of the Rules. The appellants were required to remove such waste and scrap on payment of appropriate duty or to get them destroyed as per the provisions of the law.
5. The Commissioner of Central Excise (Appeals) had relied upon the Tribunal's decision in the case of Shriram Refrigeration Indus. v. CCE, Hyderabad . The Tribunal had held that the scrap generated during the process of manufacture was to be sent out only on payment of duty under Rule 57F(4) of the Central Excise Rules, 1944. Para 3 from that decision is extracted below-
3. We have given a careful though to the plea urged by the applicants. The plea of the applicants is that the scrap generated in the factory could be treated like any other input brought into the factory by virtue of the explanation under Rule 57A which covers the goods manufactured in the factory of production and which are used within the factory of production in or in relation to the manufacture of the final product. We observe that the scrap generated in the appellant's factory has to be dealt with in terms of the specific provision for scrap set out under the Modvat Rules viz. Rule 57F(4). Under Rule 57F(4) since the scrap is sent outside the factory the same is liable to pay duty. The appellant's plea is that they should be treated like any other input brought inside the factory by virtue of being notified under Rule 57A. It is observed that the inputs which are covered under Rule 57A are those which have suffered duty. These, after receipt in the factory and after the Modvat credit has been taken therefor, are allowed to be removed outside the factory in terms of Rule 57F(2) for certain specified purposes. It is admitted position that the scrap which has been generated during the course of the manufacture of the final product in the appellant's factory has not suffered any duty. The question of taking any Modvat credit in respect of the same and this being covered under Rule 57F would not arise. The facility of Rule 57F has been provided for to take care of the exigencies of where the manufacturer may have to send out some of the inputs in respect of which Modvat credit has been taken without having to pay duty for the reason that Modvat credit has already been taken. The scrap generated does not fall in that category. Further a plea has been taken that the Department has issued Trade Notices for the removal of the scrap generated under Rule 57F(2). In the present case, as held in the order by the Tribunal this Trade Notice issued on 18.5.1989 would not be available in respect of the goods pertaining to the period 20th July, 1988. In any case the executive instructions which are contrary to the specific statutory provisions cannot be taken to have force of law. In view of the above, we hold that on question of law as urged arises for reference. The Reference Application is, therefore, dismissed.
6. In the Larger Bench decision in the case of Wyeth Laboratories Ltd. v. CCE, Bombay , the matter relates to the waste in regard to metals. In Section Note 8(a) to Section XV, the Waste and Scrap had been defined as metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons. This definition of Waste and Scrap could not be automatically applied to the waste and scrap of plastic classifiable under Heading 39.15 of the Central Excise Tariff. The Tribunal's Larger Bench decision was there in the context of metal tariff and could not be automatically applied to the plastics.
7. After giving our careful consideration and thought to the issue involved, we agree with the view taken by the learned Commissioner of Central Excise (Appeals) in the impugned order. We do not find any merit in this appeal and the same is rejected. Ordered accordingly.